Bressler’s would like to sell 600shares of stock using the Dutch auction method. The bids received are as follows: Bidder A will receive shares and pay a price per share of . Bidder C will receive no allocation. 0; $0

Complete question:

Bressler’s would like to sell 600shares of stock using the Dutch auction method. The bids received are as follows:

Bidder         Quantity      Price $

    A                100             818

    B                 300            17

    C                400             16

   D                 700              15

The bids received are as follows: Bidder A will receive shares and pay a price per share of .

Solution:

Bidder A's quantity = [600 /(100 + 300 + 400)] ×100

                                 = 75 shares

All successful bidders will pay $16 a share

The bids received are as follows:

Bidder A will receive 75 shares and pay a price per share of $16 .

A Dutch auction is a trading system (such as an initial open bid) whereby the stock price offered is reduced before appropriate offers are available for selling all shares. Each stock is then sold at that price.

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